Calgary city council united in commitment to new event centre after lengthy meeting

Click to play video: 'City council seeks 3rd party to ‘start fresh,’ find partners for Calgary Event Centre'
City council seeks 3rd party to ‘start fresh,’ find partners for Calgary Event Centre
WATCH: Calgary city council says it plans to forge ahead with a new event centre, whether it's with Flames ownership or another party. As Adam MacVicar reports, the city's mayor says it's a new opportunity that unshackles all partners from what she calls limitations of the previous deal. – Jan 13, 2022

After hours of debate behind closed doors Wednesday, Calgary city council reaffirmed its commitment to building a new event centre as part of an entertainment and cultural district on the east side of the downtown core.

Council voted unanimously in favour of engaging with a third party that will be tasked with finding out whether the Calgary Sports and Entertainment Corporation would be interested in re-entering discussions on building an event centre, or if there are other parties interested in partnering with the City of Calgary to complete the project.

A report back to council is expected in early March.

“This time we’re looking at the entertainment district as a whole, which includes the event centre,” Mayor Jyoti Gondek said. “It may be possible that we need to enter into a partnership that includes more than two parties. We’re also looking into everything else that goes into an entertainment district, so we’re being very holistic in how we’re moving forward.”

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Gondek called the lengthy meeting productive, and that the situation presented an opportunity to rethink the vision for the area.

“I think the biggest setback that we’ve had on this project is the pandemic,” Gondek told reporters following the meeting. “I think we need to be realistic about the fact that many of the delays that we’ve encountered on the event centre moving forward had to do with supply chain and logistics and economic conditions that were completely outside the control of the two parties.”

“We now have an opportunity moving forward to reconsider what a partnership looks like.”

The decision by council comes after a comprehensive post-mortem on what led to the end of the event centre deal, which revealed few details already in the public domain on Wednesday afternoon.

Earlier in the meeting, Stuart Dalgliesh, general manager of the city’s planning department, shared a summary timeline of events that led up to the end of the deal on Dec. 31, 2021.

Click to play video: 'Calgary Flames organization pulls out of new arena deal with city due to rising costs'
Calgary Flames organization pulls out of new arena deal with city due to rising costs

The timeline showed the pre-construction stage gate – a point in time where both sides of the deal had to mutually agree in order to progress – was delayed eight times due to factors like the onset of the pandemic and escalating costs.

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In January 2021, costs exceeded the original estimate. The original deal between CSEC and the City of Calgary was signed in July 2019 and had both sides agree to cover the half cost of the then $550-million event centre. The city was going to provide the land and retain ownership of the building.

The city also agreed to pay $22.4 million to demolish the Saddledome as well as reclamation work on the land.

Dalgliesh said the original costing was based on five other comparable arenas.

A July 2021 meeting between the city and Flames ownership increased the budget to $608.5 million. The city’s share of the costs went up to $287.5 million. The Calgary Municipal Land Corporation was replaced by Calgary Sports and Entertainment (CSEC) as development manager. The requirement for financial security was removed, and the facility fee for non-sporting events went up to 9.5 per cent.

The stage gate to begin construction was extended to Dec. 31, 2021.

Simultaneous to this, the development permit process was going through its paces.

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The pre-application process required a trio of reports: a climate risk assessment, a renewables and low-carbon feasibility study, and a waste reduction project. The first two of those reports were submitted in October 2021.

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“The development authority worked with the applicant to incorporate the climate resiliency elements during October and early November. Two climate resiliency elements were reviewed and accepted by the applicant prior to the development authority’s report recommendations,” Dalgliesh said.

Click to play video: 'Calgary events centre: City and CSEC to each cover $12.5M in cost overruns, CMLC out'
Calgary events centre: City and CSEC to each cover $12.5M in cost overruns, CMLC out

On Nov. 18, 2021, the Calgary Planning Commission – the development authority that is independent of city council – recommended sidewalk improvements and climate mitigation on the roof as part of a the list of 70 conditions attached to the development permit. Conditions are regularly attached to development permits for developers to fulfill.

Those conditions along with inflationary and supply chain issues raised the bill to more than $634 million.

“Final costing and budget was still approximately six months away, once construction plans would be complete,” Dalgliesh said Wednesday.

It was after the Nov. 18, 2021 planning commission meeting that CSEC took umbrage with the escalating costs in discussions with the city.

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Dalgliesh said the city pledged to return to the Flames ownership group with solutions to the escalated costs.

Of $12.1 million in right of way costs, the city offered to cover $6.4 million for roadway reconstruction.

Of the climate resiliency items that included solar panels and operating costs to get the event centre to net zero by 2035 – $3.9 million in costs – the city offered to help CSEC find grant funding.

Dalgliesh said these offers were made in writing to the Flames ownership group on Dec. 20, 2021.

Calgarians first learned CSEC had pulled out of the event centre deal on Dec. 21, 2021, following a phone call between Gondek and Flames majority shareholder Murray Edwards.

Click to play video: 'Owners struggle with additional requirements for climate mitigation on new event centre: Calgary Flames president'
Owners struggle with additional requirements for climate mitigation on new event centre: Calgary Flames president

Gondek said at the time it was a “very professional and straightforward” conversation in which Edwards told her CSEC would be unable to make the financial commitment after the development permit for the building was approved.

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Because both the city and Flames ownership didn’t agree to move forward through the next stage gate by Dec. 31, 2021, and onto construction, the event centre deal ended.

Dalgliesh said, to date, some $23- to $24-million had been spent to bring the event centre to the brink of the construction phase. Per their agreement, CSEC and the city will split up those costs, as well as the remaining wind-down costs.

On Wednesday, councillors asked about the climate mitigation elements of the event centre and were told those were informed by council’s 2018 decision on climate resilience and mitigation policies.

But councillors heard the 2035 net zero goal was a goal.

“The target date of 2035 was not binding, but it was chosen because it’s an ambitious target that is consistent with the imperatives of climate science that require rapid decarbonization,” Debra Hamilton of the city’s planning department said. “We need some buildings to be meeting this target well in advance of 2050 in order to meet (the city’s net zero) 2050 target.”

Those 2018 policies also had the event centre aim for LEED Silver certification.

“We had agreed, as a project, to target LEED Silver,” Dalgliesh said. “I believe that we would have achieved LEED Silver, even if the climate resiliency pieces had not been added.”

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Concordia University economics professor Moshe Lander said the prospect of a new pro hockey arena and event centre still hangs over Calgary, especially after CSEC said it was unable to move forward.

“This type of thing, that there’s always some sort of contention between the city and the sports team itself, it’s pretty common play,” Lander told Global News. “Maybe this is a little bit much to say: ‘We’re pushing away from the deal’ after it was signed and done.

“But the fact that there’s these kind of rancorous negotiations – not surprising at all.”

Click to play video: 'Flames, city say coverage of costs cause of Calgary arena deal collapse'
Flames, city say coverage of costs cause of Calgary arena deal collapse

Lander said the National Hockey League doesn’t frivolously allow franchises to relocate and “roam wherever they want.”

“Twenty-four (NHL) owners would have to get behind the idea of a relocation to Quebec City or Houston,” the Concordia professor said. “And they’re probably going to try and extract (around) a billion dollars out of them, the way that they got a billion dollars out of ownership groups in Vegas or in Seattle to get them to move.”

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In a statement released Thursday morning, the Calgary Municipal Land Corporation said “as partners on the Rivers District Master Plan since 2018, CMLC and the Calgary Stampede are committed to the long-term success of the district and remain optimistic that ongoing discussions being led by the City of Calgary ultimately result in a positive outcome for Calgarians and the Rivers District.”

“Since the Event Centre was approved in 2019, it has been thoughtfully integrated into the overall vision for the district, where it would bring significant energy and complement other major projects already underway,” said Kate Thompson, CMLC president and CEO.

“We are pleased to see council’s interest in seeking resolution on the Event Centre project. Meanwhile, we are keeping our eyes squarely on delivering the exciting and transformational projects on track for completion in 2024: the BMO Centre expansion, the Stampede Trail redevelopment, and the 17 Avenue extension and Stampede Station rebuild.”

Thompson goes on to add that while the absence of the Event Centre would affect the overplan plan, the Culture + Entertainment District vision isn’t centred around any single project.

“A multitude of interconnected projects, large and small, will collectively shape the C+E and drive its success. We’re confident that the significant investment already committed here will sustain the vision and create something Calgarians can be proud of,” she said.

The mayor said the city would not be eliminating all the “good work that was done” on the previous deals with CSEC on the project, and that “anything that was found successful could certainly be carried on.”

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Gondek said she had hope CSEC would be optimistic about the future of the event centre project.

“We are optimistic about moving forward with them, and being unshackled from the previous deal might give us a better opportunity to move forward together,” Gondek said.

Click to play video: 'Checking in with Calgary Mayor Jyoti Gondek'
Checking in with Calgary Mayor Jyoti Gondek

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